The Village’s finances are accounted for and budgets are developed in accordance with generally accepted accounting principles (GAAP) as established by the Governmental Accounting Standards Board (GASB). Budgetary control is at the fund level, and a budget is adopted for every fund. The budget is considered balanced when the sum of estimated revenues and fund balances are equal to or greater than expenditures.

Budgets for governmental fund types are adopted on the modified accrual basis of accounting which is the same basis that is used for the Village’s audited financial statements. Revenues are recognized when they become measurable and available. Expenditures are recognized when the liability has been incurred, with the exception that principal and interest payments on general long‐term debt are recognized when due.

The proprietary fund types are budgeted on a basis consistent with GAAP, utilizing the accrual basis of accounting, except for capital outlay and debt principal which are budgeted as expenditures.

If necessary, the annual budget may be amended by approval of the majority of the Village Board of Trustees at any time during the year. Budget amendments are usually made in response to changing priorities or unforeseen circumstances.

The Village of Lisle’s fiscal year begins May 1 and concludes April 30. The process of developing the budget begins in November with a review of revenue trends and forecasts for the upcoming fiscal year, and includes Village Board discussion and approval of a property tax levy. Based on a combination of projected revenues and fund balances, departmental expenditure targets are developed by the Finance team. Individual department budgets are then prepared for submittal in January. The Village budget team (consisting of the Village Manager, Deputy Village Manager/CFO, and Financial Services Director) reviews budget requests from each department.

Revisions to budget requests and revenue projections are incorporated into the proposed budget, which is then provided to the Village Board and the public for review in February. At the February 20, 2023 Committee of the Whole meeting, the Village Board will hold a budget session to review and discuss the proposed budget with the Village Manager and Management Team members. A budget ordinance is then prepared and a public hearing will be held at a regular meeting of Village Board on March 20, 2023. The budget will be presented for Village Board approval at the April 3, 2023 Board meeting. Village Code requires that an approved budget ordinance be in place by April 30th.

The following information details the significant financials policies of the Village which assist in structuring the operations of the Village. The Village Manager's Office and Financial Services Department will continually review each of the Village’s policies and may periodically recommend new policies or changes to existing policies for approval by the Village Board.

General Fund Fund Balance Policy

The Village will maintain a fund balance in the General Fund to fund operations for a period of six months. This is reviewed annually through the budget process and is calculated as six months or 50% of General Fund operating expenditures.

Capital Asset Policy

Capital assets are major assets that benefit more than a single accounting period. They include: land, land improvements, buildings, building improvements, construction in progress, machinery and equipment, vehicles and infrastructure. A capital asset is to be reported and, with some exceptions, depreciated in government‐wide statements and, for enterprise funds, in the individual fund statements. Assets that are not capitalized are expensed in the year of acquisition.

For financial reporting purposes, an item must be at or above the capitalization threshold of $20,000 per unit to be considered a capital asset. This capitalization threshold includes improvements to building and infrastructure; however, repairs and most renovations will expensed within the reporting period.

Cash Management and Investment Policy

As required by State statute, an investment policy has been formally adopted by the Village Board. The investment policy provides guidelines for the prudent investment of Village funds and outlines the policies for maximizing the efficiency of the Village’s cash management practices.

It is the policy of the Village to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the entity and conforming to all state and local statutes governing the investment of public funds.

Police Pension Funding Policy

The Village’s Police Pension Fund is funded by employee contributions, investment earnings, and a portion of the Village's annual property tax levy. To determine the appropriate funding requirement set by state statute for the next fiscal year, an annual actuarial valuation of the Police Pension Fund is conducted. The Village’s Police Pension Funding policy is to be 100% funded by the year 2040, which exceeds the statutory minimum requirement of 90%. Staff will continue to monitor the actuarial valuation assumptions and adjust funding as necessary to remove the issue of negative amortization. The latest actuarial valuation included assumptions which reduced the interest rate from 7.00% to 6.75% (based on current trends) and reduced the payroll growth from 4.00% to 2.00%.

IRMA Excess Surplus Policy

The Village is insured through the Intergovernmental Risk Management Agency (IRMA). IRMA provides a tailored public entity coverage program for members of this municipal risk management pool. IRMA is required to keep a certain amount of reserves to pay for future claims of its members. If the reserve balances exceed the required amount, the Board of Directors can declare an “Interest Income Credit” and some part of the excess amount is issued to the members and is referred to as the Excess Surplus Fund. These are funds that the member can withdraw, apply to the annual contribution, or leave on account with IRMA, earning IRMA’s investment rate of return. Staff will retain between $500,000 and $750,000 in the Excess Surplus Fund and use any overage to offset the cost of the annual contribution.

IPBC Retiree Group Coverage Change

The Village belongs to the Intergovernmental Personnel Benefits Cooperative which is a consortium that provides municipal entities the ability to band together to secure group health insurance. Belonging to IPBC allows the Village to contain its healthcare costs and reduce the impacts of volatility in the healthcare market. IPBC recently adopted a policy effective July 1, 2020 that will limit coverage of spouses and dependents under the Illinois Spousal Continuation Act to HMO plans. The policy does not affect retirees currently on the plan nor are there foreseeable impacts to future retirees as spouses and dependents are typically extended coverage through compliance with other statutory requirements. Consequently, the Village’s practices regarding retirees and their dependents will reflect this new policy and will comply with statutory minimums.

One-time Revenue Policy

Occasionally, the Village receives one‐time large revenues that are not expected to be received on an ongoing basis, such as criminal forfeiture funds received due to the Police Department’s assistance in a forfeiture case.

Staff will align the use of one‐time revenues with one‐time expenditures, and forego the inclusion of one‐time revenues in future budget years. Staff further recommends using one‐time revenue to invest in projects that will result in long‐term operating cost savings, examples of which include capital expenditures that will reduce operating costs, information technology projects that will improve efficiencies, and special projects that will not incur on‐going operating costs.

Balanced Budget Policy

A budget is considered balanced when the sum of estimated revenues and fund balances are equal to or greater than expenditures.

Capital Improvement Fund Funding Policy

The Capital Improvement Fund accounts for all capital improvement projects or equipment replacements greater than $20,000 not funded by another Fund. Funding will be provided by the following revenue sources:

• A General Fund contribution between $250,000 and $500,000 per year from general revenue sources based on funding availability.
• The revenue received from Utility Tax which is approximately $1.5 million per year.
• The surplus received from the Navistar TIF which is approximately $50,000.
• The Motor Fuel Tax Revenue/Fund Balance to fund a portion of the Road Improvement Program
• If in the future the Village Board decided the issuance of long‐term debt is necessary, any debt obligation issued would be used to finance a significant capital project or improvement, not for operational purposes. The duration of long-term debt obligations would not extend beyond the anticipated useful life of the projects financed.

The finances of the Village are organized and budgeted by funds. A fund is a fiscal and accounting entity with a self‐balancing set of accounts used to account for resources, and claims against them, that are segregated in accord with legal or contractual restrictions, or to carry out specific activities. The Village of Lisle fund structure, illustrated below, includes all funds with budgeted expenditures.

Major funds are indicated by a light gray background.

Governmental Funds

Governmental funds are used to account for the acquisition, use, and balances of expendable financial resources and the related current liabilities, except those accounted for in proprietary and fiduciary funds. The governmental fund types used in the Village of Lisle include General, Special Revenue, Debt Service and Capital Projects.

• General Fund - The General Fund is used to account for all financial resources except those required to be accounted for in another fund. This is often the main operating fund of a governmental unit.

• Capital Project Funds - Capital Project Funds are created to account for all resources used for the acquisition of capital facilities by a governmental unit except those financed by Enterprise Funds. The Village maintains two such funds.
  • Capital Improvement - This Fund accounts for the acquisition and improvement of Village property, including infrastructure and general capital assets, along with funds used for the eventual replacement of capital vehicles and equipment.
  • Stormwater - The Stormwater Fund is used to account for maintenance and management of the Village’s Storm Water infrastructure.

• Debt Service Fund - Debt Service Funds are created to account for the accumulation of resources for, and the payment of, general long‐term debt principal and interest. The Village has one debt service fund.
  • 2016 Pledged Hotel/Motel Tax - This Fund accounts for the 2% share of the Village’s 5% Hotel/Motel tax that supports debt payments related to the $3.7 million general obligation bonds issued in August, 2016 to refinance 2004 bonds issued to finance the construction of a stadium on the grounds of Benedictine University.

• Special Revenue Funds - Special revenue funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditure for specific purposes. The Village of Lisle Special Revenue Funds include:
  • Motor Fuel Tax - The Motor Fuel Tax Fund is used to account for the Village’s share of state Motor Fuel Tax revenues that are legally restricted to maintenance and construction of streets and roads and related costs approved by the Illinois Department of Transportation.
  • Liability Insurance - The Liability Insurance Fund is used to account for the portion of the property tax levy that is allocated to Liability Insurance.
  • I-Net Consortium - The I‐Net Consortium Fund accounts for the Institutional Network built as part of the cable franchise agreement and shared by consortium members made up of six (6) local organizations, including the Village of Lisle, Lisle Woodridge Fire District, Lisle School District 202, Lisle Library, Benedictine University, and the Morton Arboretum.
  • Criminal Forfeiture - The Criminal Forfeiture Fund accounts for restricted resources forfeited to the Village as a result of criminal prosecutions.
  • Hotel/Motel Tax - The Hotel/Motel Tax Fund accounts for 3% of the Village’s 5% Hotel/Motel tax that is used to support economic development in the Village.
  • Navistar TIF - The Navistar TIF Fund accounts for property taxes and expenditures related to the TIF established to promote redevelopment of the property which is currently the site of the Navistar company headquarters.
  • UTI TIF - The UTI TIF Fund accounts for property taxes and expenditures related to the TIF established to promote redevelopment of the property which is currently the site of the Universal Technical Institute.
  • Downtown TIF - The Downtown TIF Fund accounts for property taxes and expenditures related to the TIF established to promote redevelopment of the Village of Lisle downtown corridor.

Proprietary Funds

Proprietary Funds are income determination funds that are used to account for a government’s business-type activities; enterprise and internal service funds that are accounted for on a business‐type basis.

• Enterprise Funds - An enterprise fund is a proprietary fund established to account for operations financed and operated in a manner similar to a private business. The Village of Lisle enterprise funds include:
  • Water & Sewer - The Water and Sewer Fund accounts for the provision of water and sewer services to residents and businesses of the Village. All activities necessary to provide such services are accounted for in this fund, including, but not limited to, administration, operations, maintenance, billing and collections.
  • Commuter Parking - The Commuter Parking Fund is used to support the maintenance and management of the Village’s commuter parking lots and related infrastructure, and is financed through parking fees and permits.
  • Cemetery Operations - The Cemetery Operations Fund accounts for activities related to the operation of a Village‐owned cemetery.

• Internal Service Fund - Internal Service Funds are used to account for business‐type activities in which the customers are other government departments or agencies. The Village has one internal service fund.
  • Insurance - The Insurance Fund accounts for resources required to pay liability insurance premiums and claims for the Village. The Fund also accounts for the costs associated with providing insurance benefits to Village employees, including health, dental, vision and life insurance.

Fiduciary Funds

Fiduciary Funds include trust and agency funds used to account for assets held by a government unit in a trustee capacity or as an agent for individuals, private organizations, other government units, or other funds. The Village of Lisle has one Fiduciary Fund, the Police Pension Fund.

• Police Pension Fund - The Police Pension Fund is a trust fund that accounts for the accumulation of resources used to support Lisle police officer retirement and disability pensions. Resources are contributed by employees at rates fixed by law, and by the Village at amounts determined by an annual actuarial study.